Energetica India Magazine - November 2025

Implementation of market coupling and its integration with SCED across the three power exchanges, namely, IEX, PXIL and HPX, in markets such as DAM, TAM and RTM is an ambitious initiative. The Central Electricity Regulatory Commission (CERC) has taken a decisive step towards market coupling with an aim to harmonise price discovery across India’s power exchanges. By its Order dated July 23, 2025, in Petition No. 8/ SM/2025, CERC directed Grid-India to implement a shadow pilot for coupling the Term Ahead Market (TAM) of power exchanges. This decision is in continuation of CERC’s earlier Order dated February 6, 2024, in Petition No. 1/SM/2024, direct- ing Grid-India to implement a shadow pilot for: • Coupling of the Real Time Market (RTM) and Day Ahead Market (DAM); and • Coupling of the RTM with the Security Controlled Economic Despatch (SCED) mechanism. Implementation of market coupling and its integration with SCED across the three power exchanges, namely, the In- dian Energy Exchange (IEX), the Power Exchange of India Ltd. (PXIL), and the Hindustan Power Exchange (HPX), in markets such as DAM, TAM and RTM is an ambitious initiative. However, the re- sults of the D+1 run of the shadow pilot have been only marginally encouraging. Order dated July 23, 2025, inter alia, re- cords that: • In case of DAM coupling: o Welfare increases by INR 38 Crore (0.3 percent) o Volume cleared increases by 52 MU (0.2 percent) • In case of RTM coupling: o Welfare increases by INR 72 lakh (0.01 percent) o Volume cleared increases by 1.54 MU (0.01 percent), • In case of RTM-SCED coupling, de- spite the reduction in aggregate costs, the average cost increases by INR 1/ MWh in the coupled scenario due to re- duced demand catered. There is considerable debate over the net impact of market coupling and the implementation of SCED. While initial data from the shadow pilot shows gains and cost savings in the RTM-SCED cou- pling category, the scale of these gains remains modest in DAM and RTM. This raises questions on whether market cou- pling and its combination with SCED can deliver consistent positive results. There are some foreseeable challenges and roadblocks: • Dominance of IEX in the Power Market: When one power exchange (IEX) com- mands around 90 percent of the market share, it defeats the purpose of market coupling, i.e., to aggregate bids across all three power exchanges for uniform price discovery. However, when the majority of bids originate from a single power ex- change, coupling the bids from the other two power exchanges would only have a marginal impact on price discovery. • Reduced Utility of Power Exchanges: Power exchanges provide a platform for price discovery in trading. In a coupled scenario, the three Power Exchanges would function as mere intermediaries that collect the bids to be forwarded to a Market Coupling Operator (MCO). Consequently, Power Exchanges would not have any incentive to innovate or de- velop the market further. The apprehen- sion over such reduced utility of power exchanges is evidenced by plunges in the share value of IEX every time the concept of coupling is promoted by the CERC. • Marginal Improvement in Transmission Utilisation: Considering the fact that the power exchange market only constitutes around 7 percent of the total generation, the objective of improved utilisation of CERC Directs Grid-India to Implement Shadow Pilot for Coupling Term Ahead Market MARKET COUPLING 56 energetica INDIA- November_2025 Anupam Varma Aditya Ajay Partner JSA Advocates & Solicitors Principal Associate JSA Advocates & Solicitors